LoonieViews May 31, 2012


LoonieViews
May 31, 2012
USD/CAD Open 1.0283-88 Overnight Range 1.0262-1.0313

The Canadian dollar see-sawed nervously around 1.0300 overnight as FX markets awaited “data dump Thursday” in the US. Economic stats on tap for today include: Challenger Job cuts, RBC consumer Outlook, ADP employment change (150k) GDP (1.9%) Core PCE ( 2.1%, QoQ), Initial Jobless Claims (370k), Chicago Purchasing Manager survey (May 56.8) In addition, a very modest improvement in risk sentiment on expectations of a favorable outcome on an Irish vote for the European fiscal pact, an uptick in Italian and Spanish bonds ahead of the ECB next week and just plain old profit taking forced the US dollar to return a little of the this week’s gains. Asian equity indices closed down, European equity indices are all up as are NY equity futures. WTI oil is $88.00 and gold is $1,566.60

The short term USD/CAD technical’s are bullish and in a steep uptrend on an hourly chart while trading above 1.0250. However, 1.0310 has proven to be fairly sticky and a retreat below 10250 should lead to further CAD$ gains to 1.0190. For today, USD support is at 1.0260, 1.0240 and 1.0210. Resistance is at 1.0290, 1.0310 and 1.0340

With month end demand for US dollars mostly completed, equities upticking and a slightly better looking risk profile, the loonie should grind higher and retest support around 1.0210.

In other news, a stray dog joined a group of Chinese cyclists, travelling over 1.100 miles, and over 12 mountains in China’s Southwestern Plateau. More impressively, the pup managed to avoid the cooking pot.

Today’s Range 1.0210-90

Michael O’Neill

LoonieViews@loonieviews.com

Advertisements

LoonieViews May 30, 2012


LoonieViews
May 30, 2012
USD/CAD Open 1.0269-74 Overnight Range 1.0218-1.0290

The Canadian dollar reversed yesterday afternoon’s gains and sank like Syria’s Assad’s, chances for a UN humanitarian award. A full scale shift into risk aversion mode drove global equity indices south, lowered oil prices (WTI $89.46) and boosted demand for the so called “safe-haven” currencies, JPY, CHF and USD. The JPY has rallied high enough that the Bank of Japan may be getting ready to intervene. Meanwhile, Spain has hogged center stage in Europe with the ECB reportedly rejecting a Spanish plan to recapitalize banks, and pushing up government borrowing costs as a result. Month end demand for US dollars should see the overnight trend continue throughout today’s session, especially due to a lack of meaningful economic data today.

The short term USD/CAD technicals remain bullish. The US dollar is bumping up against the top of a downtrend channel at 1.0275, intact since October 2011 which if broken could lead to 1.0675. For today, USD support is at 1.0240 and 1.0210. Resistance is at 1.0305, 1.0320 and 1.0350

Month end demand for US dollars should keep the Canadian dollar on the defensive today but I wouldn’t expect the US dollar to extend gains through the overnight high, ahead of Friday’s US employment report.

In other news, on Tuesday, workers at the Conservative Party Headquarters in Ottawa on were horrified when they opened a package and discovered a human foot. Perhaps it was a ploy by a recent graduate, applying for an entry level position, trying to get a foot in the door so to speak.

Today’s Range 1.0230-1.0305

Michael O’Neill

LoonieViews@loonieviews.com

LoonieViews May 29, 2012


LoonieViews
May 29, 2012
USD/CAD Open 1.0233-38 Overnight Range 1.0210-1.0260

The Canadian dollar marked time yesterday and overnight following Friday’s spike through USD resistance at 1.0280 to test 1.0300. Asian markets got an initial boost on speculation that China would unveil a stimulus plan but it was quickly denied by an ‘official” report in the Xinhua News agency. The odds on a Greek Euro exit, once considered a long shot, have evolved into almost a “sure thing” thanks to various reports from major banks and Investment firms. These reports predict 1) sovereign debt defaults 2) Bank runs 3) economic slowdown as exports decline in Russia and China. Fortunately, a new poll out of Greece suggests 75% of Greeks want to keep the Euro-they just aren’t so keen on any austerity measures. These events have already pushed the loonie lower so further losses should be contained ahead of this weeks, Canadian GDP data and Friday’s US employment report. WTI oil is $91.23 and gold is $1,572.88 Asian equity indices were higher as are the European indices (except FTSE and IBEX 35)

The short term USD/CAD technical’s are bullish which is the base of the steep uptrend line since the beginning of May. A move below this level would indicate further CAD$ gains to 1.0120. A move above 1.0305 suggests further gains to 1.0420. For today, USD support is at 1.0220, 1.0205 and 1.0180. Resistance is at 1.0255, 1.0280 and 1.0305

The markets will have to contend with a mixture of rumors and tape bombs from the Euro zone, more speculation on Chinese stimulus intentions ahead of Friday’s key US employment data which argues for further choppy trading within current ranges.

In other news, the Financial Post reported that the new Leader of the NDP which is Canada’s official opposition party, has managed to refinance his mortgage 11 times since 1985. This doesn’t bode well for Canada’s finances if his party ever got their hands on the cheque book. Using your residence as an ATM-hmmm what could possibly go wrong with that strategy?.

Today’s Range 1.0205-1.0270

Michael O’Neill

LoonieViews@loonieviews.com

LoonieViews May 25, 2012


LoonieViews
May 24, 2012
USD/CAD Open 1.0255-60 Overnight Range 1.0250-1.0285

The Canadian dollar flirted with disaster overnight, bumping up against strong USD resistance at 1.0285, but end of week profit taking and a wee dash of optimism in the Euro zone saw the US dollar retreat vs. the majors. Reports that Germany’s Merkel may comprise and agree to a constitutionally committed debt sharing program to support sovereign debt and a statement by Italy’s Monti that Greece will stay in the Euro encouraged US dollar selling across the board. Global equity indices are slightly lower to flat. WTI oil is $91.13 and gold is $1,563.90 The only data from the US is the Univ. Of Michigan Confidence survey, expected to be unchanged at 78.8

The short term USD/CAD technical’s are bullish while trading above 1.0170, but need a decisive move above 1.0280 to extend gains. However, strong USD resistance in a US dollar over-bought environment should see the CAD$ grind higher and test 1.0170 For today, USD support is at 1.0230 and 1.0170. Resistance is at 1.0280 and 1.0320

The doom and gloom scenario surrounding the Euro zone for the past week has dissipated slightly with the Merkel compromise report and Mondi’s optimistic statement on Greece. This has encouraged a round of profit taking in long dollar positions which should spill over into the loonie. Buy CAD$ here at 1.0260, stop at 1.0295, looking for 1.0180.

In other news, Bloomberg is reporting that the three directors who oversaw JPMorgan’s risk committee were a museum head (sat on AIG’s governance committee in 2008) the son of a billionaire and the CEO of a company that makes flight controls and boots. In JPM’s defence, they are probably better qualified in these jobs that 95% of the free world’s politicians in their jobs.

Today’s Range 1.0180-1.0280

Michael O’Neill

LoonieViews@loonieviews.com

LoonieViews May 24, 2012


LoonieViews
May 24, 2012
USD/CAD Open 1.0238-43 Overnight Range 1.0238-1.0280

The Canadian dollar came under renewed selling pressure in Europe, following a quiet Asian session, but managed to recoup all its overnight losses as North America found their desks. Predictions of a further Chinese manufacturing slowdown are undermining commodity currencies and Eurozone dithering is encouraging risk aversion trading. France and Germany are at odds over a proposal for a Eurobond issue. A decline in a German business confidence index exacerbated EUR/USD selling pressure. Asia equity indices were mixed but European equity indices and NY equity future’s are higher. Today’s US data includes; Jobless claims (370k), and Durable goods (0.2% MoM) WTI oil is $90.44 and gold is $1,560.09

The short term USD/CAD technical’s are bullish while trading above 1.0170, looking for a move to 1.0675 on a break. For today, USD support is at 1.0220, 1.0205 and 1.0170 Resistance is at 1.0280 and 1.0360

The pessimistic prognosis for the Eurozone which now includes a Citibank forecast for a Greek exit in 2013 plus the prospect of further weakness in the Chinese manufacturing sector and a lame duck US administration focussed on their re-election prospects and not the economy, may keep risk aversion in the spotlight and drag down the loonie in the process.

In other news, further proof that Brampton, Ontario is a attracting a vast number of multi-ethnic immigrants was found when a four foot alligator was caught strolling through a residential back yard.

Today’s Range 1.0170-1.0260

Michael O’Neill

LoonieViews@loonieviews.com

LoonieViews May 23, 2012


LoonieViews
May 23, 2012
USD/CAD Open 1.0220-25 Overnight Range 1.0205-1.0235

The Canadian dollar bobbed around with a negative bias in a narrow range overnight, undermined by both EU debt issues going pear shaped and diminished global growth prospects driving WTI oil lower. Rising disillusion towards the EU over a perceived lack of progress with the debt crisis and the increased risk of a run on banks in Spain, Portugal, Ireland and other peripheral countries kept safe haven currencies in demand. Global equity indices all declined as have US equity futures. WTI oil is at $91.00 and gold is $1,556.40. US data releases include; New Home sales (forecast 335k) and Housing prices. Canada releases Retail Sales (forecast 0.3% MoM)

The short term USD/CAD technical’s are bullish but appear to be consolidating gains within a 1.0160-1.0260 band. A push through 1.0300 will negate a USD downtrend line intact since May 2009 setting the stage for a spike to 1.0420 and perhaps 1.0675. For today, USD support is at 1.0210, 1.0180 and 1.0160. Resistance is at 1.0240, 1.0260 and 1.0280

The Canadian dollar may benefit from a stronger than expected retail sales number, however in the current risk aversion environment, CAD$ gains will be short lived. Buy US dollars between 1.0170-90 with a stop below 1.0140.

In other news, the man who beheaded and attempted to eat a passenger on a greyhound bus from Winnipeg is now receiving escorted day passes. Apparently the public is not at risk because his medication silences the voices in his head and he has become Vegan.

Today’s Range 1.0170-1.0260

Michael O’Neill

LoonieViews@loonieviews.com

LoonieViews May 22, 2012


LoonieViews
May 22, 2012
USD/CAD Open 1.0178-83 Range Since Friday Close 1.0155-1.0240

The Canadian dollar continued to retreat yesterday, nearly touching 1.0250 (the 61.8% Fibo retracement level of the entire 0.9790-1.0520 range intact since mid-December/11. ) The JPY came under pressure after Fitch downgraded Japan’s long term debt with a negative outlook, similar to Facebook investors “unfriending” the shares and driving them through the IPO price of $38 to below $33.00 at one point. Despite this, Asian and European equity indices are a touch higher although US equity futures are pointing down. WTI Oil is $92.04 and gold is at $1,577.98

The short term USD/CAD technicals are bullish looking for another test of 1.0250 while trading above 1.0080. A break above 1.0250 suggests further USD upside to 1.0520. However, the steepness of the USD uptrend argues for a period of consolidation between 1.0080 and 1.0250 as momentum has waned. For today, USD support is at 1.0150, 1.0130 and 1.0180. To the top, USD resistance is at 1.0190, 1.0230 and 1.0250

The Canadian dollar has dropped rather quickly in a fairly short time and is probably due to benefit from a bout of profit taking, especially if equity markets bounce. It may be worth selling USD/CAD here at 1.0180 (Stop above 1.0290) for a quick pop back to 1.0080.

In other news, Prince Charles and Camilla have arrived in Canada to allow the ‘colonists’ to pay homage to their monarch. The royals got to taste some maple syrup, play road hockey, chat to students in a Library and watch fireworks. It is unclear if this extremely boring itinerary did anything to dissuade future visits

Today’s Range 1.0090-1.0180

Michael O’Neill

LoonieViews@loonieviews.com